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Stage 4: Complete the checklist and calculation chart

Once you have decided what to measure and how to calculate it you need to collect the relevant information and data. There several ways to do this – the choice will depend on your specific situation and the types of costs and benefits you are dealing with.

There are two main options for assessing the monetary value of costs and benefits where there isn’t an existing ‘cash’ value; ‘revealed preference’ or ‘stated preference’. The first means to find an existing market value to act as a proxy. For example the cost of staff time spent on complaints before and after the engagement process can be a proxy measure for the value of reduced dissatisfaction. Stated preference means to ask those who benefit to estimate how much they value that benefit, for example by asking them what they would be willing to pay for it. Generally revealed preferences are seen to be more accurate than stated preferences.

When asking for stated preferences you can either ask people for their ‘Willingness to pay’ or ‘Willingness to accept’, that is how much they’d be willing to pay to get the benefit or how much they would pay to avoid a cost. It is good practice to ask a large number of people across different income groups to state their preferences in order to avoid income levels biasing the findings. A common question is ‘What is the most you would be prepared to pay every year to receive good x?’ You can gather people’s preferences through face to face, phone or online surveys and questionnaires.1

Revealed preference comes from looking at people’s behaviour in a similar or related market to get cost values. For example you could use house prices as a proxy for regeneration success; the overall desirability of an area is likely to be linked to improvements. You can also look at what it would cost to replace or compensate for the loss of a non-market good. Getting people to fill in diaries is an effective way of mapping how much time they spend on particular activities rather than asking them to estimate how much time they have spent some time afterwards.

Another technique to gain a better understanding of the benefits of engagement is to use ‘Benefits transfer’ –‘borrowing’ data from other studies. If someone has conducted a detailed study into the monetary value of a particular benefit and it is relevant to your case you can use these estimates. You might for example make use of Home Office estimates of the costs of crime, or data from the place survey and neighbourhood statistics.

Key concepts for measuring data

Key concept

Definition

Revealed preference

To find a proxy market value, e.g. measuring the value of reduced dissatisfaction by measuring the cost of staff time spent on complaints before and after the engagement process

Stated preference

To ask those who benefit to estimate how much they value the benefit, e.g. by asking people for their willingness to pay or willingness to accept (see below for definitions)

Willingness to pay

How much an individual would be willing to pay to get the benefit of a stated preference

Willingness to accept

How much an individual would be willing to pay to avoid a cost of a stated preference

Benefits transfer

The ‘borrowing’ of data from other studies. If someone has spent time carrying out a detailed study into the monetary value of a particular benefit and it is relevant, make use of those estimates.

The Checklist

Project overview information

Do you have the data?

Numbers of participants involved in the project and their role

Methodology for the project – including how long it lasts

What the objectives for the project are

What went well, what did not go so well and what unexpected results did you experience? (for evaluations)

Details of any other money savings expected as a result of the process

Recorded feedback from participants regarding process, incl. follow up assessments.

Outcome information

Data

In £?

Any non-monetary costs and benefits associated with the project (e.g. increased social inclusion and community cohesion)

What was the alternative to engagement, for example the ‘do nothing’ option? Can you estimate costs and benefits for this?

Valuing engagement calculation chart

The toolkit features a pair of spreadsheets with equations that can be used to capture financial data on engagement projects. One spreadsheet is for cases where you want to compare the costs and benefits of an engagement project with the costs and benefits of another activity and the other is for cases where you just want to measure the costs and benefits of an engagement project on its own:

Calculating costs and benefits with comparator [Excel, see attachment]

Calculating costs and benefits without comparator [Excel, see attachment]

Annex: The calculation tool scrutiny checklist

This sheet is for you to use to scrutinise the cost – benefit data you have collected for your engagement project.

Once you have filled in the equation form, it is important that you cross analyse all of your inputs using this sheet to ensure you have not entered any incorrect or ambiguous information that may affect the value of your business case.

Simply go through each of the sections and write your responses in the boxes.